Sebi slaps Rs 60-Lakh fine on senior Jaiprakash Associates executives for 'insider trading'

MUMBAI: Capital market regulator Sebi has pulled up Jaiprakash Associates chairman Manoj Gaur, his wife Urvashi Gaur, brother Sameer Gaur, S D Nailwal, wholetime director of the company, and Harish K Vaid, senior president corporate affairs and company secretary, for alleged insider trading in the company's shares. A total of Rs 60 lakh fine has been imposed on them.

The regulator has alleged that these individuals had taken advantage of their position by trading shares of Jaiprakash Associates while they were in possession of unpublished price sensitive information (UPSI). Sebi had investigated all trades in the stock from September 29, 2008, to October 27, 2008.

But Manoj Gaur in a statement issued late Friday evening denied any wrongdoing. "The findings in the Order are completely erroneous and contrary to factual position. It is unfortunate that despite adequate representation to the Adjudicating Officer, frivolous inferences have been drawn. Aggrieved by the Order, we are in the process of challenging the same before the Securities Appellate Tribunal," said the J P Associates chairman.

Gaur said the Sebi order related to the purchase of 1,000 shares by his wife and 7,400 shares by his brother between October 13 and 16, 2008. These purchases were not based on any insider information and had not even been sold.

According to Sebi, the probe revealed that the company had received the trial balances for the quarter ended September 30, 2008, from its various units in the first week of October 2008. After this the company had announced that its board would meet to consider the unaudited financial result for the quarter, interim dividend and rights issue.

"The consolidated trial balance is the base document from which the financial results of a company would be derived and decision about dividend can be taken. The financial results and dividend declaration are both price sensitive information," Sebi said in its adjudication order.

"The fact that JAL (Jaiprakash Associates) closed its trading window on October 11, 2008, itself proves that UPSI existed from that date," it said. The trading window is closed for directors, specific category of employees and all connected persons in the run up to the announcement of financial results.

The regulator has alleged that Manoj Gaur, who was in possession of unpublished price sensitive information with regard to the company, had communicated the same to his wife Urvashi and brother Sameer, who traded in the stock, thereby making use of certain prior information.

Sebi said that by virtue of their relation with Manoj Gaur, they would fall within the ambit of "person deemed to be connected person" and were in possession of information which were not in public domain.

The regulator has issued a separate order against S D Nailwal who was holding the finance portfolio. According to Sebi, Naliwal was involved in the consolidation of quarterly results at the company level and in the preparation of agenda of proposed interim dividend and rights issue.

The regulator has accused that Nailwal traded in the company scrip during the period when the trading window was closed for promoters and senior employees.

"Noticee (Nailwal) should have complied with the same. The Noticee being the Director, Finance of a large corporate like JAL should have been more vigilant about his dealings. He is also expected to be well aware of the sensitivities of his position and take due care to ensure that there is no infringement of the law in respect of his own dealings," Sebi said. Sebi also accused Harish K Vaid of similar violations.

Source: EconomicTimes